1. Congress

House of Representatives

Health Subcommittee Holds Hearing on Employer Mandate Delay, More Hearings Ahead

The House Ways and Means Subcommittee on Health held a hearing July 10 to discuss the Obama Administration's July 2 decision to delay the employer reporting requirements under the health care reform law. While both Republican and Democratic members generally agreed on the Administration's decision to delay the employer reporting requirements, statements by Democrats largely viewed the move as necessary but unfortunate; on the opposite side of the aisle, Republicans blamed the Administration's move on the federal government's inability to capably administer the complexities of the ACA. Chairman Brady (R-TX) said, "Clearly the rollout of Obamacare is in disarray and experts are questioning whether the White House is competent enough to administer its own massive health care law." In addition, 11 senior House Republican Members sent a letter July 9 to the Obama Administration questioning its legal authority to delay the mandate and requesting more information on its analysis and rationale for the decision. A second hearing will be held Wednesday, July 17, on the same topic.

Witness List:

Avik Roy

Senior Fellow

Manhattan Institute

James Capretta


Ethics and Public Policy Center

William Dennis Jr.

Senior Research Fellow

National Federation of Independent Business

Sean Falk

Owner, WolFTeaM LLC

President, Nachogang LLC,

On behalf of the International Franchise Association

Timothy Jost

Robert L. Willett Family Professor of Law

Washington and Lee University School of Law

For more information, or to view the hearing, please visit: waysandmeans.house.gov

Ways and Means Accepting Public Suggestions for Entitlement Reform

On July 11, Ways and Means Chairman Camp (R-MI) announced his committee will be accepting public comments on bipartisan proposals to reform Medicare and Social Security. The announcement follows several hearings held by the Ways and Means Subcommittees on Health and Social Security as part of the Committee's entitlement reform hearing series. As part of the effort to engage Americans in the discussion, the Committee will provide draft legislative text on bipartisan plans that have been proposed over the last several years. Feedback can be submitted via email to entitlementreform@mail.house.gov and the first proposal related to the future of Social Security is available at www.waysandmeans.house.gov/entitlementreform.

Upcoming Hearing on Drug Compounding

The Energy and Commerce Health Subcommittee has announced it will hold a hearing entitled "Reforming the Drug Compounding Regulatory Framework." The hearing will examine potential legislative options for reforming the regulation of drug compounding and clarifying the authority of state and federal regulators. The subcommittee previously examined drug compounding on May 23, and the ongoing effort builds on the Oversight and Investigations Subcommittee's investigation into the deadly fungal meningitis outbreak stemming from tainted steroid injections produced by the New England Compounding Center.


Panel I

Janet Woodcock, M.D.


Center for Drug Evaluation and Research

Food and Drug Administration (FDA)

Panel II

Jeffrey Francer

Assistant General Counsel

Pharmaceutical Research and Manufacturers of America

David Gaugh

Senior Vice President for Sciences and Regulatory Affairs

Generic Pharmaceutical Association

B. Douglas Hoey

Chief Executive Officer

National Community Pharmacists Association

David G. Miller

Executive Vice President and CEO

International Academy of Compounding Pharmacists

Carmen Catizone

Executive Director

National Association of Boards of Pharmacy

Kasey Thompson

Vice President

American Society of Health-System Pharmacists

Allan Coukell

Senior Director, Drug and Medical Devices

The Pew Charitable Trusts

For more information, or to view the hearing, please visit: energycommerce.house.gov


Labor-HHS Appropriations Clears Subcommittee

On Thursday, the Senate Labor, Health and Human Services, and Education, and Related Agencies Appropriations Subcommittee advanced legislation to fund the Departments of Labor, Education, and Health and Human Services for Fiscal Year 2014. The bill would provide $165.6 billion in discretionary budget authority, including $1.253 billion in cap adjustments for health care fraud and abuse control programs and for program integrity at the Social Security Administration, in accordance with the allocation for this bill. The fiscal year 2013 enacted level was $157 billion. During consideration, amendments to strike funding for provisions of the ACA, such as the Independent Payment Advisory Board (IPAB) and health insurance exchanges, were defeated along party lines. The bill would, however, require the Secretary of HHS to publish details of the funds spent on the health insurance exchanges from 2010 through fiscal year 2015. The bill also includes a sense of the Senate that the health care exchanges should verify annual household or individual income before making premium tax credits available.  

Upcoming Finance Committee Hearing on Health Information Technology

Chairman Baucus has announced the Senate Finance Committee will hold a hearing entitled "Health Information Technology: A Building Block to Quality Health Care" on Wednesday, July 17, at 10 a.m. in 215 Dirksen Senate Office Building.


Farzad Mostashari, M.D., ScM

National Coordinator for Health Information Technology

Department of Health and Human Services

Patrick Conway, M.D., MSc

Chief Medical Officer and Director,

Center for Clinical Standards and Quality

Acting Director

Center for Medicare and Medicaid Innovation

For more information, or to view the hearing, please visit: www.finance.senate.gov

2. Administration


HHS Awards $150 Million in Grants to Community Health Centers

HHS has announced that the Health Resources and Services Administration (HRSA) is releasing $150 million in federal grants to assist in outreach efforts related to the Affordable Care Act. These grants, which will go to 1,159 community health centers across the country, are designed to aid the uninsured in their efforts to obtain health insurance. Specifically, the centers can use these grants to hire 2,900 full-time employees whose job it will be to help the uninsured apply for federal subsidies in the state-based marketplaces. Each community health center that receives funds will be allocated, at minimum, $59,000. Outreach efforts conducted by the centers will prove to be crucial, according to the National Association of Community Health Centers, which cites surveys showing that "more than three-fourths of those uninsured Americans who are most likely to qualify are unaware of their coverage options."

Final Rules on ACA Income Eligibility, Medicaid and CHIP

According to final rules issued by the Department of Health and Human Services on July 5, taxpayers will be allowed to use the attestation of their own annual income to qualify for advance payments of premium tax credits, allowing for faster eligibility determinations. In addition, health care exchanges will be able to rely on these attestations even if the applicant's income is indicated through modified adjusted gross income-based sources to be lower than reported, with further verification not necessary during the first year of the Affordable Care Act's implementation. The HHS also issued final rulings clarifying that available information from the Small Business Health Options Program that is relevant to the state in which an exchange operates, must be obtained by health exchanges.

$198 Million in Exchange Grants Awarded

Last week, HHS announced the award of $198 million in assistance to states establishing health insurance exchanges. The funds will be split among six states: Colorado, Nevada, New Mexico, Vermont, Virginia and West Virginia. Colorado, which had already received about $62 million in exchange grants, was the only state awarded a multiyear grant, worth $116.2 million, in this latest round. All the other states receiving new exchange awards had already received multimillion-dollar grants from HHS. HHS said the money will go toward various exchange functions, such as enhancing IT systems, in-person assistance programs, health plan review and marketing and education.

Final Rule on Health Insurance Navigators

CMS has posted the final rule for navigators and other personnel that will help consumers sign up for insurance in the health exchanges clarifies that staff at hospitals, community health centers and other health organizations will be able to participate.

Applications will be available by the end of this month for organizations that want to be able to certify "application counselors," who can perform most of the same functions as navigators and "in-person assisters" in helping people enroll in health plans.

CMS also said it will award navigator grants for federally facilitated exchanges on Aug. 15 and made clear that no agents or brokers who are being paid in connection with enrolling people in the exchanges could qualify as navigators or in-person assisters. It added a new requirement from the proposed rule that they not receive any compensation from issuers of stop-loss insurance either.


ACA Delays Won't Affect Access to Premium Tax Credits

According to guidance issued by the IRS on July 9 in response to the Administration's decision to delay implementation of the employer mandate to provide employees health insurance under the ACA, individuals' ability to receive premium tax credits will be unaffected by the delays. The employer transition relief that was recently issued gives employers additional time to update their reporting protocols to comply with the reporting requirements mandated under the Affordable Care Act. Individuals will still be able to enroll in qualified health plans through health exchanges, and the new delays will not change any other current Affordable Care Act provisions. Proposed rules reflecting the delay until 2015 for employer information reporting provisions under the Affordable Care Act are expected to be published this summer.

3. State Activities

Oregon Approves Exchange Premium Rates

On July 3 the Oregon Insurance Division approved rates for a dozen insurers and two co-ops in both the individualized and group markets. The approved rates are the result of two months of review that included public hearings and analysis of the rationalizations that the companies utilized for their suggested rates. The department said it reduced proposed rates in the individual market by various amounts, ranging "from a few percentage points to 30 percentage points." Moreover, requested small-group market rates were cut by up to 12 percentage points, the insurance department said. Approved plans will be available for purchase through the Cover Oregon Exchange, Oct. 1, 2013, with rates varying solely by age and geographic area for comparable plans.

4. Regulations Open for Comment

NEW -- Proposed Rule, Medicare Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS)

CMS has issued the calendar year (CY) 2014 Medicare Physician Fee Schedule (PFS), Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rules. The proposed PFS regulation would continue to expand access to primary care services by proposing to provide payment for complex chronic care coordination services, beginning in CY 2015. It proposes to adjust payment rates for over 200 codes where Medicare pays more for services furnished in an office than in a hospital outpatient department or ASC, as part of the misvalued codes initiative. It also would make refinements to the Physician Quality Reporting System (PQRS) program, the Medicare Shared Savings Program and the Medicare EHR Incentive Program.

PFS: CMS projects an across-the-board reduction in payment rates based on the Sustainable Growth Rate (SGR) formula. If the SGR goes into effect, Medicare payment rates are projected to be reduced by 24.4 percent for services in 2014. The final projection, based on more recent data, will be made available in the final rule.

OPPS: CMS proposes to update the OPPS market basket by 1.8 percent for CY 2014. The proposed hospital market basket increase published in the fiscal year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule is 2.5 percent. The Medicare statute requires a productivity adjustment reduction of 0.4 percentage points and a 0.3 percentage point reduction to the CY 2014 OPPS market basket, so the proposed CY 2014 OPPS market basket update would be 1.8 percent.

ASC: ASC payments are annually updated for inflation by the percentage increase in the consumer price index for all urban consumers (CPI-U). The Medicare statute specifies a multifactor productivity (MFP) adjustment to the ASC annual update. For CY 2014, the CPI-U update is projected to be 1.4 percent. The MFP adjustment is projected to be 0.5 percent, resulting in an MFP-adjusted CPI-U update of 0.9 percent for CY 2014. In addition, CMS is proposing that certain ancillary or adjunctive services that would be packaged under the OPPS for CY 2014 also would be packaged under the ASC payment system for CY 2014.

In the OPPS/ASC proposed rule, total CY 2014 OPPS payments are projected to increase by $4.37 billion or 9.5 percent, and CY 2014 Medicare payments to ASCs are projected to increase by approximately $133 million or 3.51 percent as compared to CY 2013. The CY 2014 OPPS/ASC proposed rule would also expand the categories of related items and services packaged into a single payment for a primary service under the OPPS; create 29 comprehensive APCs to replace 29 existing device-dependent APCs; streamline the current five levels of outpatient visit codes; and continue paying at ASP+6 percent for non-pass-through drugs and biologicals that are covered separately under the OPPS.

The proposed rule would add five new measures for the Hospital Outpatient Quality Reporting (OQR) program, affecting payment in CY 2016, with data collection beginning in CY 2014. It seeks comment on proposed changes to the Quality Improvement Organization regulations.

CMS will accept comments on these proposed rules until Sept. 6, 2013, and will respond to comments in final rules to be issued by Nov. 1, 2013.

IRS Proposed Rule For Tax Credits Issued on Exchanges

On June 28, the IRS issued a proposed rule on specific information regarding premium tax credits the insurance exchanges must report to IRS and to the person receiving the tax credit. Under the proposed rule, IRS explains what specific information regarding the tax credits the exchanges must report to IRS and to the person receiving the tax credit. Under ACA, tax credits can be made available to eligible recipients each month. The proposed rule would require the exchanges to report the required information to the IRS on a monthly basis and to the recipient on an annual basis. The information the exchanges must report would include, among other things, the name, address, taxpayer identification -- i.e., Social Security -- number (or date of birth if a taxpayer ID number is not available), the monthly premium for the applicable benchmark plan used to compute the tax credit and the monthly premium for the plan or plans in which a taxpayer, responsible adult or family member enrolls, without reduction for advance credit payments. According to the proposed rules, the exchange would report the information to the IRS on or before the 15th day following each month of coverage. The exchange must also send the tax credit recipient an annual statement including the same information on or before Jan. 31 of the year following the calendar year of coverage. Comments are due Aug. 31.

CMS Proposed Dialysis Payment Rule

CMS has issued the proposed End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) rule for renal dialysis services furnished to beneficiaries on or after Jan. 1, 2014. CMS projects the updated calendar year (CY) 2014 ESRD bundled market basket increase will be 2.9 percent, which is reduced by an estimated multi-factor productivity (MFP) adjustment for CY 2014 of 0.4 percent, for a projected update of 2.5 percent to the ESRD PPS base rate in CY 2014. Section 632(a) of the American Taxpayer Relief Act of 2012 requires the Secretary to make reductions to the ESRD PPS base rate to reflect the Secretary's estimate of the change in the utilization of ESRD-related drugs and biologicals by comparing per patient utilization data from 2007 with such data from 2012. This adjustment results in an overall 12 percent reduction in Medicare payments for CY 2014. The rule seeks comment on whether this change should be phased in over more than one year.

As a result of the application of the ESRD bundled market basket update reduced by the MFP adjustment, the wage index budget-neutrality adjustment and the drug utilization adjustment, CMS projects the proposed updates for CY 2014 would decrease total payments to all ESRD facilities by 9.4 percent compared with CY 2013.

The rule also proposes changes to the ESRD Quality Incentive Program (QIP) for payment year (PY) 2016.

The proposed rule also addresses issues related to the coverage and payment of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), including clarification of the definition of routinely purchased DME; clarification of the grandfathering provision related to the three-year minimum lifetime requirement; and implementation of budget-neutral fee schedules for splints, casts and intraocular lenses (IOLs) inserted in a physician's office.

View the proposed rule. CMS will accept comments on the proposed rule until Aug. 30, 2013.

Proposed Rule on Home Health Payments

On June 27, CMS published a proposed rule to update Medicare's Home Health Prospective Payment System (HH PPS) payment rates and wage index for calendar year (CY) 2014. The rule proposes rebasing adjustments, with a four-year phase-in, to the national, standardized 60-day episode payment rates, the national per-visit rates and the NRS conversion factor. Payments to home health agencies (HHAs) are estimated to decrease by approximately 1.5 percent, or $290 million in CY 2014, reflecting the combined effects of the 2.4 percent HH payment update percentage ($460 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate; the national per-visit payment rates; the NRS conversion factor ($650 million decrease); and the effects of ICD-9 coding adjustments ($100 million decrease). This proposed rule would also establish home health quality reporting requirements for CY 2014 payment and subsequent years and proposes to specify that Medicaid responsibilities for home health surveys be explicitly recognized in the State Medicaid Plan, which is similar to current regulations for surveys of Nursing Facilities (NF) and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID). Comments must be received by Aug. 26.

Final CMS Rule on Improving Coordination Between Long-Term Care Hospitals and Hospices

CMS issued a rule June 26 that aims to improve care coordination between long-term care (LTC) hospitals and hospice facilities; the new rule, which goes into effect Aug. 26, 2013, clearly defines the role of each provider in delivering and maintaining the continuity of care for each patient. Because LTC facilities and hospitals provide many of the same services, there is a high possibility that residents could receive duplicative and/or conflicting services. In general, LTC facilities are usually responsible for nursing services, dietary services, physician services, dental service, pharmacy services, specialized rehabilitative services and, when necessary, laboratory and social services. The new rule mandates that LTCs that choose to arrange for the provision of hospice care enter into written agreements with Medicare-certified hospice providers of the specific services to be provided by each entity in order to reduce overlap. "We believe that a clear division of responsibilities and increased communication required by this rule will help eliminate duplication of and/or missing services," CMS said in the rule. As the rule stands, the written agreement of care will unanimously be applied to all residents within the LTC facility, not individual patients. Criticisms of the new rule are largely based on the extra burden to providers, as it will take staff time to develop the language for the one written agreement describing the allocated care services. It is estimated that the burden associated with first-year implementation of this rule is 80,695 hours or $5.5 million for the 16,139 LTC facilities affected.

Proposed Rule to Clarify Long-Term Care Ombudsman Program

The Administration on Aging (AoA) of the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS) has issued a Notice of Proposed Rulemaking, with request for comments, to implement provisions of the Older Americans Act, the State Long-Term Care Ombudsman program. This proposed rule replaces AoA's 1994 Notice of Proposed Rulemaking. The proposed rule contains two main parts, both related to the ombudsman program:

An amendment to existing regulations promulgated under the Older Americans Act at 45 C.F.R. Part 1321, and a new Part 1327, which would be added to the existing regulations. The proposed amendment to existing regulations addresses responsibilities of state agencies housing long-term care ombudsman offices not to disclose the identity of any person sending a complaint to the ombudsman or the identity of any resident of a long-term care facility. In addition, the proposed amendment would extend the disclosure protections to include "files, records, and other information" instead of only "files" as the existing rule provides.

The newly proposed Part 1327 would define the following terms included in the Older Americans Act, including "immediate family," "office of the state long-term care ombudsman" and "representative of the office of the state long-term care ombudsman." Comments are due Aug. 19.

Program Integrity Guidelines for Exchanges, Premium Stabilization Program

CMS has released a proposed rule outlining program integrity guidelines for the Health Insurance Marketplace (Marketplace) and premium stabilization programs. The proposed rule sets forth financial integrity and oversight standards with respect to Affordable Insurance Exchanges; Qualified Health Plan (QHP) issuers in federally facilitated exchanges (FFEs); and states with regard to the operation of risk adjustment and reinsurance programs. It also proposes additional standards with respect to agents and brokers. These standards, which include financial integrity provisions and protections against fraud and abuse, are consistent with Title I of the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010, referred to collectively as the Affordable Care Act. The proposed rule says that in states running only the SHOP exchange while HHS operates the exchange for the individual market, data sharing requirements between the SHOP and individual exchange won't apply. There's only one state that plans to have such an arrangement -- Utah -- and the data issue was a key concern. The rule would also allow the state to set up a navigator program for the SHOP exchange, exclusively for outreach to small businesses, that is completely separate from the one for the individual exchange. Comments must be submitted by July 15.

Pre-Existing Condition Insurance Plan (PCIP) Interim Final Rule

CMS has issued an interim final rule with comment period sets the payment rates for covered services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP) program administered directly by HHS beginning with covered services furnished on June 15, 2013. The rule sets most reimbursement rates in federally administered PCIPs at Medicare levels. This interim final rule also prohibits facilities and providers who, with respect to dates of service beginning on June 15, 2013, accept payment for most covered services furnished to an enrollee in the federally-administered PCIP from charging the enrollee an amount greater than the enrollee's out-of-pocket cost for the covered service as calculated by the plan. The rule also bans ''balance billing'' enrollees of the federal-run PCIPs to protect them ''from having to potentially shoulder significant costs that could be shifted to them as a result of this new payment policy.'' Comments will be accepted through July 22.

Tanning Bed Warning Label Proposal

The FDA issued a proposal that would elevate tanning beds from a low-risk to high-risk medical device and would add a warning label to them. If the order is finalized, manufacturers would have to submit a pre-market notification (510(k)) to the FDA for these devices, which are currently exempt from any pre-market review. Manufacturers would have to show that their products have met certain performance testing requirements, address certain product design characteristics and provide comprehensive labeling that presents consumers with clear information on the risks of use. The order proposes to include a contraindication against use on people under 18 years old, and the labeling would have to include a warning that frequent users of sunlamp products should be regularly screened for skin cancer.

The FDA will take comments on the proposed order until Aug. 7.

5. Reports


Electronic Drug Labeling: No Consensus on the Advantages and Disadvantages of Its Exclusive Use

The GAO released a report on electronic drug labeling that found stakeholders have not reached a consensus on the advantages and disadvantages of electronic drug labeling. The report focused on three types of prescription drug labeling: the prescribing information for health care practitioners, Medication Guides that detail drug information for the patient, and patient package inserts (PPI) that are required for oral contraceptives and estrogen. Stakeholders believed there were both negative and positive aspects of electronic drug labeling. One advantage was that electronic drug labeling provides the most current drug information in a user-friendly format. However, patients may not be able to access electronic drug labels or may be uncomfortable with the process. Another concern was that all information would have to come from a single source that is reliable and unbiased, according to the report. Eliminating paper labeling and switching to electronic drug labeling would require amending or reviewing of relevant federal regulations. It would also shift more responsibility to pharmacies.

Internet Pharmacies: Federal Agencies and States Face Challenges Combating Rogue Sites, Particularly Those Abroad

According to a report released by the GAO, rogue Internet pharmacies are hard to detect and combat. GAO stated that the pharmacies sell drugs that have not been approved by the FDA as well as illegally sell prescription drugs without a prescription. Rogue Internet pharmacies are also known to commit fraud, launder money and violate intellectual property rights. Despite the challenges of investigating and prosecuting rogue Internet pharmacies, the Department of Homeland Security, U.S. Customs Enforcement and Border Control and U.S. Immigration and Customs Enforcement have been successful in interdicting pharmacy shipments. Additionally, the FDA and National Association of Boards of Pharmacy (NABP) have increased educational efforts to raise awareness of rogue pharmacies.